Starbucks' next move: Italian restaurants

After years of trying to win over lunch and dinner crowds, Starbucks is preparing to open its first stand-alone Italian restaurant.

The company is teaming up with Princi, a small chain of 24-hour bakeries in Milan and London, to offer customers freshly made items including focaccia sandwiches, margherita pizzas and tiramisu. The first stage of the partnership will debut Tuesday, when Starbucks opens a Princi bakery in its upscale Reserve Roastery in Seattle. The company plans to eventually open bakeries inside all of its Reserve locations, and next year hopes to open stand-alone Princi eateries across the country. The openings will be in New York, Seattle and Chicago.

"We're getting into the food business," Howard Schultz, the chairman of Starbucks, said in an interview. "Princi will be fully integrated with bakery operations, so not only will we be roasting coffee, but we'll be baking bread, pastries -- the kind of Italian pastries you've never seen in America."

The move is the latest effort by the 45-year-old coffee purveyor to expand into food. Many of its attempts -- prepackaged cake pops, truffle mac and cheese, 'sushi burritos' -- have fizzled, analysts say, in part because Starbucks stores haven't had kitchens. If customers are paying $10 for lunch, analysts say they want it to be prepared on the spot.

"There is a perception that Starbucks is selling an inferior product," Nick Setyan, an analyst for Wedbush Securities, told The Washington Post in September.

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"Customers are saying, 'How good can that salad or sandwich be if you're not making it in front of me?' "

The new Princi locations are to have full kitchens staffed with bakers and "food ambassadors" called commessas. The menu, with about 100 items, includes baked eggs for breakfast, caprese salads for lunch, cocktails and small plates for dinner, and tarts, cookies and crostatas for dessert. Items will be priced between $3 and $11.

In 1980, Italian baker Rocco Princi started the boutique company, which now has five European locations. In July, Starbucks announced that it had invested in Princi and had become the company's global licensee. (Princi's U.S. workers will be employed by Starbucks.)

"We have never baked in our stores in 45 years. But all of that will change with the creation of this unique partnership," Schultz said in a statement at the time. "Rocco and his team at Princi possess a passion for handcrafted food and artisanal baked goods that mirrors how I feel about our coffee."

The announcement comes as Starbucks prepares to open its first coffee shops in Italy next year, starting with a Reserve Roastery in Milan.

"Having Princi in the Roastery in Italy will give us instant credibility, among other things," Schultz said.

The Seattle-based chain has tried for years, with mixed success, to get its customers to think beyond beverages. About 20 percent of Starbucks's revenue -- which last year was $21.32 billion -- comes from food sales, up 16 percent from five years ago.

But this isn't the first time Starbucks has pinned its hopes on a stand-alone bakery. In 2012, the company paid $100 million for La Boulange, a San Francisco-based company with 23 stores. Starbucks had high hopes then, too, with plans to open about 400 new locations in five years.

But it didn't take long for those plans to fall flat. Three years later, Starbucks said it would be closing its La Boulange bakeries because they were "not sustainable for the company's long-term growth."

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